On September 24, 2019, the U.S. Department of Labor announced a final rule updating the earnings thresholds necessary for employees to be deemed an exempt white-collar employee, and allowing employers to count a portion of certain bonuses/commissions towards meeting the salary level. The final rule will go into effect on January 1, 2020.
Highlights of the rule include:
- Raising the “standard salary level” from $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker);
- Raising the total annual compensation requirement for “highly compensated employees” from $100,000 per year to $107,432 per year;
- Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level; and
- Revising the special salary levels for workers in U.S. territories and the motion picture industry.
The increases to the salary thresholds are long overdue in light of wage and salary growth since 2004. A 2016 final rule to change the overtime thresholds was enjoined by the U.S. District Court for the Eastern District of Texas on November 22, 2016, and was subsequently invalidated by that court. As the 2016 final rule was invalidated, the Department has consistently enforced the 2004 level throughout the last 15 years.
More information about the final rule is available at https://www.dol.gov/whd/overtime2019/
This article was written by Emily Honet, Law Clerk
